Key Takeaways
- A Christchurch man, Trevor Taylor, has cancelled his home insurance after his premiums increased by over 30% due to a high sea surge risk rating.
- Tower Insurance has taken into account the risk of sea surge, landslips, earthquakes, and flooding for Taylor’s property, despite it being several kilometres from the sea.
- Taylor has challenged the assessment, but Tower has refused to release specific information, citing commercial sensitivity.
- Taylor believes the risk assessment is inaccurate and that the company is overestimating the risks.
- Tower claims that the high sea surge risk rating is based on the likelihood of flooding through nearby water systems, including the Avon River and Travis Wetland Nature Heritage Park.
Introduction to the Issue
The recent increase in home insurance premiums has left many homeowners in New Zealand feeling frustrated and concerned. One such homeowner, Trevor Taylor, has taken the drastic step of cancelling his insurance policy after his premiums increased by over 30% due to a high sea surge risk rating. Taylor’s property, located in the Burwood area of Christchurch, is several kilometres from the sea, which has led him to question the accuracy of the risk assessment. Tower Insurance, the company responsible for the assessment, has taken into account the risk of sea surge, landslips, earthquakes, and flooding, but Taylor believes that the company is overestimating the risks.
The Risk Assessment Process
Tower Insurance has stated that the high sea surge risk rating given to Taylor’s property reflects the likelihood of flooding through nearby water systems, including the Avon River, Travis Wetland Nature Heritage Park, and Horseshoe Lake. The company claims that if a storm coincides with high tides, water levels can rise, and waterways can carry water many kilometres inland, causing flooding during a sea surge event. However, Taylor has done his own research and believes that the risk assessment is inaccurate. He has pointed out that the Ministry of Environment notes that storm surges rarely exceed 0.6 metres on open coasts around New Zealand, and that the largest recorded storm surge in Kawhia Harbour was 0.9 metres in May 2013. Taylor believes that the journey the sea surge would have to take to reach his property is "quite ridiculous" and involves the water travelling up an estuary and a river, bursting through stop banks, and travelling uphill past houses.
The Dispute Over Risk Assessment
The dispute between Taylor and Tower Insurance has highlighted the issue of risk assessment and the lack of transparency in the process. Taylor has asked to see the evidence used to assess his property, but Tower has refused to release specific information, citing commercial sensitivity. Taylor has filed a Privacy Act request, asking for all the information Tower had on his property, but was refused based on the grounds that it was commercially sensitive. He believes that the company is "making up the risk" and that a government body should have a responsibility to investigate risk assessments by insurance companies if people feel they are wrong. Tower, on the other hand, claims that its assessment is consistent with the Christchurch City Council’s flood map, which notes the property as being in the council’s flood hazard management area, with a one in 200-year flood risk.
The Impact on Homeowners
The increase in home insurance premiums has significant implications for homeowners, particularly those who are already struggling to make ends meet. Taylor’s decision to cancel his insurance policy is a drastic one, but it highlights the frustration and concern that many homeowners feel when faced with significant increases in their premiums. Tower Insurance has stated that fewer than 10% of properties with higher sea surge or landslide risks will see an increase in the natural hazards portion of their premiums, and that a third of those will see a premium increase of less than $100 a year. However, for some customers with significantly higher risks, the natural hazards portion of the premium will increase by more. The company claims that it simplifies the detailed data into a risk rating, which represents its evaluation of the insurance risk for a property based on the data.
The Need for Transparency and Accountability
The dispute between Taylor and Tower Insurance highlights the need for transparency and accountability in the risk assessment process. Homeowners have a right to know how their premiums are being calculated and what factors are being taken into account. The lack of transparency in the process can lead to mistrust and frustration, as seen in Taylor’s case. The government and local councils have a responsibility to ensure that risk assessments are accurate and fair, and that homeowners are not being unfairly penalized. By working together, they can figure out ways to mitigate hazards and provide more accurate risk assessments, which would ultimately benefit homeowners and the insurance industry as a whole.